Legislature(1999 - 2000)
02/16/2000 01:40 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 116
An Act relating to the Board of Agriculture and
Conservation, to the agricultural revolving loan fund,
to the disposal of state agricultural land, and to the
Alaska Natural Resource Conservation and Development
Board; and providing for an effective date.
REPRESENTATVE JEANNETTE JAMES noted that HB 116 was the
culmination of much intensive work by representatives from
the Legislature, the Administration, conservation boards and
the agriculture industry.
She stated that HB 116 would propose a new board, the Board
of Agriculture and Conservation, comprised of the
Commissioner of Department of Natural Resources plus seven
people involved in grass-roots commercial production
agriculture. The legislation would extend the life of the
Agriculture Revolving Loan Fund (ARLF) by instituting grass
roots fiscally conservation board that would have more
control over the Alaska Revolving Loan Fund. HB 116 would
make the ARLF interest rate competitive with other loaning
institutions which are currently drawing farmers away and
shortening the life and income of the ARLF. Representative
James noted that HB 116 would allow flexibility for the new
board to restructure loans in the event of a disaster, and
it would strengthen the emergency loan program.
Representative James added that the bill would assure that
the board would be consulted prior to any disposal of
agricultural land. The new board would take over statutory
duties of the existing Division of Agriculture and would
hire an executive director. She believed that would mean a
predictable continuity for that position. She urged the
Committee's support of the legislation.
Representative James acknowledged that the interest rate
issue had been addressed in a separate piece of legislation
that has already passed out of the House Finance Committee.
Representative James emphasized that it is imperative HB 166
accompany that legislation. She pointed out that all the
land sale decisions would be left in the bill.
Representative James spoke to the fiscal note. She pointed
out that the $9 thousand dollars travel component had been
determined by Department of Natural Resources. The
Department noted that in creating a new board, there
initially would need to be more meetings to establish
regulations. She explained the funding would come from the
ARLF. She suggested that the board and the Creamery
Corporation would offset some of those costs. The creamery
funds are not listed on the note.
Representative James stated that additionally, there exists
an assumption that the change would result in a reduction in
revenue from the interest rate. She assumed that interest
rate reductions would result in new loans. Currently, the
interest rates are higher than most other loan companies,
which keeps them from being competitive. She disagreed with
the idea of a change to revenues.
Co-Chair Therriault commented on the loss of revenue. He
noted that in the proposed committee substitute, the changes
would conform the loan provisions included in HB 116 with
the Committee's work done on Representative Harris' bill.
Co-Chair Mulder MOVED to adopt the work draft committee
substitute, 1-LS0407\T, Cook, 2/15/00, as the version of the
bill before the Committee. There being NO OBJECTION, it was
adopted.
Co-Chair Therriault referenced the fiscal note. He pointed
out that the sponsor statement indicates that the new board
would take over the duties and responsibilities of the
Division. He asked if it was the intent that the board
takes over "all the responsibilities" of that agency. He
advised that some of those obligations were specified in
statute.
Representative James replied that through the legislation,
the board would be making the decisions currently made by
the Director of Agriculture. She commented that if the
Department wanted to change the direction of the Division,
that would be their prerogative. The authority given by the
Division of Agriculture, which would be managed by a board
of directors, would be the hiring of a director as opposed
to the advising of a director.
Representative James commented that the board has a job to
do and a lot of decision making associated with performing
that work. The intent of the legislation is to keep the
direction going in a forward movement. The purpose of the
legislation is to place the regulation and policy power in
the hands of the Board of Agriculture. They would implement
policies through the statutory authority given to them.
Co-Chair Therriault spoke to the duties assigned to the
Division of Agriculture. He noted the "vested" duties of
each position. The Commissioner delegates certain duties to
the Division Director. He summarized how he envisioned the
legislation had been drafted. He noted that there are few
items that the Division is responsible for which have a
specific statutory directive. He asked what would happen to
those situations delegated by statute to the Commissioner.
Representative James understood that the Division of
Agriculture is under Department of Natural Resources. She
stated that the issues would instead be delegated to the
Division of Agriculture. That Division would be managed by
the Board of Agriculture with hired staff. She did not
foresee anything changing. She commented that she did not
know if there would be a need for a statutory change.
Representative Green did not foresee a Board of Agriculture
with any authority.
Representative Austerman voiced his appreciation on all the
work that Representative James had accomplished for
agriculture business development.
Representative J. Davies echoed his appreciation on that
issue. He voiced concern with the option of the board
hiring the director. He suggested that idea be revamped, as
the current process works well. He stressed that the effect
of the current practice has achieved the intent of the
proposed legislation. He questioned if expanding the
continuity of the director had been considered, because that
action would make it more difficult for a governor to remove
that director.
Representative James responded that the issue had been
considered regarding whether or not the removal of a board
member could occur at the "pleasure of the Governor or for
cause". She believed that the legislation would allow the
removal for cause. In the original version of the bill, in
order to accomplish that, the board would need to be
approved by the Legislature. She noted that at the request
of the Department, that clause was removed.
Representative James maintained that there is an issue
regarding the changing of directors and how that affects the
Board of Agriculture. She maintained that a change in
policy, which comes with a change in director, is difficult.
She stressed the need to provide a continuity of policy and
did not believe that the comparison with the Board of
Forestry was relevant.
Representative Grussendorf questioned if changing the
statutes would cause constitutional problems in the
Governor's power to appoint. Representative James responded
that there are some similarities to the Alaska Seafood
Marketing Institute Board (ASMI). She emphasized that the
concept is how to guarantee continuity of policy.
ROB WELLS, BOARD OF AGRICULUTRE AND CONSERVATION, MATSU,
(TESTIFIED VIA TELECONFERENCE) expressed concern with the
legislation. He acknowledged the intent to bring continuity
and policy between Administrations and to allow farmers to
control their own entity by managing the revolving loan
fund. He referred to an audit by the Legislative Budget and
Audit Committee (LBA) from two years ago. Mr. Wells noted
that the audit found that the Board is conservative
realizing that most of the Division functions are funded
from the ARLF. He noted, for the record, that there is
concern with the delegation of authority. He advised that
the sponsor statement notes that duties of the Division will
be transferred to the Board.
Mr. Wells added that the three-year appointments could be
problematic. He suggested that the current Governor would
appoint all members. There could be a change of 6 members
in one year, which would most likely result in that Board
choosing a new director. Such action would remove the
continuity that the sponsor is seeking.
Mr. Wells voiced concern with members who have loans, being
able to sit on the Board. He suggested such action could
warrant members being questioned through the Executive
Ethics Act. Mr. Wells agreed with Representative James that
the interest income raising and falling would affect
revenue. He voiced concern with the constitutional powers
of the Governor. A Board should control the State assets in
the revolving loan fund, an action still requiring an annual
budget. It would no longer need to be an inline provision.
Mr. Wells questioned, under the new structure, if an appeal
could be made. He reiterated his concern regarding how this
would function in today's world.
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, noted that he had reviewed the bill for the
Administration. He spoke to the concept of the legislation
placing an independent board over a line agency. He
commented that there is a constitutional argument to be
made, indicating such action should not be allowed to happen
under the current framework. In A.S., Article #3, it
clarifies that premise. There is one instance, that you
would be allowed to have a multi member board be at the head
of a principle department, but in that instance, the
Governor would be allowed to approve the Executive Director
hired by that board. It would not be legal to take a small
discrete section of a department and do that. Divisions are
not mentioned in most statutes, as they are an unassigned
function. Mr. Baldwin noted that an instance of making a
division director as an appointee of a division board is an
unusual concept, however, he noted that there have been
compromise situations.
Mr. Baldwin mentioned that if such provisions were in law,
it would be very difficult to remove that board member. He
mentioned that there could be problems with imbezzilment
and/or responsibility to State agencies. Mr. Baldwin
reiterated that it is difficult to enforce a for-clause
provision.
Mr. Baldwin continued, a "for-clause provision" recognizes
that certain individuals have property rights in office.
That type of board member does not have a salary but does
have a "term of office". That term is staggered which could
present a problem. He stressed that continuity is important
in government, but the problem arises when trying to
determine how to fix responsibility for governments actions.
The manner, in which the Alaska Constitution does it, is by
making the Governor responsible. The concern is that the
State of Alaska has "government by board" to run things
locally, but with statehood, the State opted that the
Governor be the responsible party for how government
operates. At present time, one or two people are
responsible. Mr. Baldwin stated that the proposed concept
would be erosion back to the old unworkable ways. He urged
that the Committee not adopt the legislation.
Mr. Baldwin spoke to the "conflict of interest" clause,
which is not that much different from what currently exists.
He referenced Page 2, Line 20, noting concern with the
wording "affects that lease, permit or loan". He commented
that language was "loose" and would cause problems.
Representative James responded to where the board would sit
in the "scheme" of things. She pointed out that those
involved in the agriculture industry fear that the ARLF is
not spending funds appropriately. "A government does not
shrink itself by nature".
Representative James advised that the Commissioner would
supervise the activity. She pointed out that all decision
making power of the Director would go into the Board of
Agriculture. That would result in taking the authority from
one person and putting it into a board. She noted that a
joint group of people would be implementing the intent of
the Commissioner.
Representative James indicated that the legislation would
enhance the agricultural activities of the State. She noted
that regulations and policies would be drafted according to
the statutes. Policies are looser and need to be treated
equally over time. She acknowledged that it would be an
experiment.
(TAPE CHANGE, HFC 00 - 35, SIDE 2).
Representative James emphasized that the allocation of
duties would be fairly distributed.
Co-Chair Therriault noted that HB 116 would be HELD in
Committee for further consideration.
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